How To Improve The Economy Quickly
For over 35 years, all crude oil transactions world wide have been made with the U.S. Dollar as the underlying currency. When the Dollar value is weak and falls in relation to the Euro and Yen, oil prices rise, causing what is known as Petrodollar Inflation. Want to improve the world economies...get off the US Dollar standard.
The US Dollar has been and is currently continuously devalued (inflated) by Ben Bernanke leadership in the Federal Reserve accompanied by and U.S. government monetary policies. According to Wikipedia, Petrodollar warfare refers to a hypothesis that one of the unknown, driving forces of United States foreign policy over recent decades has been the status of the United States dollar as the world's dominant reserve currency and as the currency in which oil is priced." "The reality is that the value of the U.S. dollar is determined by the fact that oil is sold in dollars. If the denomination changes to another currency, such as the euro, many countries would sell dollars and cause the banks to shift their reserves, as they would no longer need dollars to buy oil and gas. This would thus weaken the dollar relative to the euro." As it is right now, the U.S. Dollar has been weakened against the Euro deliberately so make American exports appear cheap.
In August and September, crude oil dropped for the first time in a very long time, to the mid 70 dollars a barrel. Gasoline also dropped well below $4.00 a gallon. On Friday, the retail sales report was released and it was very positive, up +1.4%. Why? Because for the first time in a very long time, consumers were not pouring every penny they had into their gas tanks. They could buy consumers goods instead. But now the stock market is rising for its annual end of year rally, and it is taking crude oil with it. Crude is already back at $87 a barrel with $100 in site probably over the next two months.
At the beginning of the year, riots broke out around the world because the cost of staples such as wheat, rice, soybeans and corn had skyrocketed. Cost of shipping commodities had driven the cost of commodities up with it. Crude oil was exceeding $100 a barrel. The stock market was rising unrealistically, January through April and taking crude oil with it. A handful of Wall Street brokerages were making a killing at the expense of Mainstreets around the globe.
Along comes the summer doldrums. The stock market crashes, and crude oil tumbles with it. Now consumers can afford basic staples again. But here comes the end of year rally, with the market going up out of control again, completely devoid of reality, and crude oil is spiking again. What is the cause of the end of year rally? Good economic news? Hardly. Wall Street wants its bonuses. For the year the Dow is flat. Wall Street simply can't justify bonuses with a flat Dow. So traditionally end of year, the stock market runs up in order for Wall Street to justify its bonuses and crude oil spikes out of control, causing every commodity to rocket along with it.
If the stock market wants to have its rally at end of year, do so. But get crude oil off the US Dollar standard. Don't allow crude oil to skyrocket just because a handful of brokerages want to justify their paychecks. Expect October's retail sales report to tank again when gasoline prices catch up with skyrocketing crude oil.
In March, Ben Bernanke said that high oil prices could lead to "temporary" and modest inflation. He said the same thing in October in the FOMC Meeting Minutes. When gasoline again goes above $4.00/gallon and foodstuffs skyrocket, he will again claim that it is "temporary". He has said that for over 2 years now. Just what is the definition of "temporary?" Explain temporary to mainstreet who needs to buy milk and bread to feed their families.
If the Wall Street protesters truly understood that crude oil price and stock market rallys are tied at the hip and everything they eat, wear, and drive is about to run out of control again, just like what happened in March, who knows what the riots would look like.
Barbara Cohen CIO, Shadowtraders, and professional day trader, specializes in teaching students how they can be trading futures with their own trading system and trading strategies. Ms. Cohen has helped hundreds of traders achieve their goals trading. Find out if trading futures is for you by attending one of Ms. Cohen’s Free Webinars. Check out my Futures Trading Articles. For more information, send an email to shadowsupport@shadowtraders.com or call 866-617-2037 today.